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Energy Matters Dec 10, 2020

Election brings challenges and opportunity for energy producers

From Washington, D.C., to California’s city halls, new lawmakers and familiar energy policies will shape the oil and gas industry – and your energy future

Rock Zierman

CIPA’s Rock Zierman

By Rock Zierman, CEO, California Independent Petroleum Association

CIPA is a non-profit, non-partisan trade association whose members represent approximately 70% of California’s total oil production.

The oil and natural gas industry provides the energy needed to make modern life possible and to fight the pandemic, whether that’s warming homes, cooking meals, powering laptops for remote work and distance learning, or even making surgical gloves and medical masks so health-care heroes can save lives.

Since oil and natural gas impact nearly every facet of our lives, it’s no surprise that energy policy took centerstage on the ballot box in races for the White House, State Capitol and halls of local government. The stark dichotomy in views comes from those who see a future without oil and natural gas and others, like us, who know innovation in our energy future will come from the oil and natural gas industry.

New federal Administration, familiar energy policies

With President-Elect Joe Biden taking office in the New Year, his positions on energy might mirror those he held when he served as Vice President in the Obama Administration. After leaving office, former President Obama took credit for the United States’ energy independence due to policies he enacted that dramatically cut foreign oil imports.

However, what happens in Washington D.C., may not materially change how California producers operate. As an energy island without interstate pipelines or cost-effective ways to transport crude oil here, California does not benefit from the oil and natural gas boom in other states. When California production drops, demand is met by increasing imports from foreign entities – mainly Saudi Arabia – that do not share our humanitarian values or environmental stewardship.

Additionally, California state and local laws governing the highly regulated oil and natural gas industry are often more stringent than federal requirements. Mary Nichols, California’s Chairman of the California Air Resources Board – an unelected board that has nearly unfettered power to craft environmental policies – is rumored to be appointed as the head of the U.S. Environmental Protection Agency.

State policies grab headlines but hurt working families

Governor Newsom signed an executive order this fall to ban the sale of gas-powered vehicles by 2035 and asked the Legislature to ban hydraulic fracturing by 2024. Lawmakers who do not represent oil-producing regions have already pledged to carry legislation to ban hydraulic fracturing as well as other traditional ways to produce oil.

These misguided policies will only hurt our state by driving up energy costs for all Californians as our state recovers from a pandemic-battered economy. They will kill some of the best jobs in parts of the state, such as the Central Valley and Central Coast, which already suffer from high unemployment rates. Yet, all the while, these policies will fail to deliver any greenhouse-gas reductions since tanker traffic from foreign countries will simply fill the void.

“Some of the worst ideas at the State Capitol get their start in local government. These include ‘setbacks.’”

Meanwhile, CIPA continues to push for changes in state law to give our members the same opportunities as other industries to allow new and traditional energy sources to work side-by-side.

City halls shape statewide policies

Some of the worst ideas at the State Capitol get their start in local government. These include “setbacks,” which are arbitrary distances set around production sites. There’s no science to prove that arbitrary “setbacks” would improve California’s already strictest-in-the-nation regulations. But it’s an idea that has been recycled recently in the Capitol and will likely resurface in 2021.

Several cities and counties are considering policies including amortization (phasing out production over time by revoking duly issued permits), requiring extra bureaucratic permitting hoops only for the oil and natural gas industry, and changing land-use laws through General Plan Updates. The industry has united in challenges in both the courtroom and at the ballot box, knowing  these threats could be replicated by local and state governments.

Industry shows leadership in climate change

While November’s election brought both challenges and opportunities for energy producers, CIPA’s members have not wavered in their leadership in meeting the state’s aggressive environmental targets.

In fact, California’s oil and natural gas companies are ahead of schedule in achieving climate goals set by state policymakers. CARB announced Nov. 5 that all businesses covered by the state’s cap-and-trade program have fully met their obligations for compliance in 2019 – achieving a 100% compliance rate.

CIPA members, like Aera, are already making investments in innovation to show how new and traditional energy sources can work together to deliver affordable, reliable and cleaner energy.

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